Internal Revenue Service: Fiscal Year 2009 Budget Request and Interim Performance Results of IRS's 2008 Tax Filing Season

GAO-08-567 Published: Mar 13, 2008. Publicly Released: Mar 13, 2008.
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Highlights

The Internal Revenue Service (IRS) has ambitious goals to improve enforcement, improve taxpayer service, increase research, and continue investing in systems modernization. The President's 2009 proposed budget is a roadmap for how IRS intends to achieve these goals. IRS's 2008 filing season performance, along with the performance of paid preparers who help taxpayers, is a key indicator of the tax system's impact on taxpayers. GAO was asked to (1) assess how the budget request allocates resources compared to prior years, (2) determine the status of systems modernization efforts, (3) assess filing season performance, and (4) assess IRS's ability to identify paid preparers. GAO compared the budget request to prior years, updated our previous reporting, compared IRS's filing season performance to prior years and goals, and interviewed IRS officials.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of Internal Revenue should extend the use of return on investment (ROI) in future budget proposals to include major enforcement programs.
Closed - Implemented
In April 2012, IRS extended use of Return on Investment (ROI) information by calculating actual ROIs for three major enforcement programs - Exam, Collections, and Automated Underreporter. IRS budget officials said they plan to report this data in the fiscal year 2014 budget justification, pending various approvals.
Internal Revenue Service The Commissioner of Internal Revenue should develop a plan to require a single identification number for paid preparers, including the feasibility of options, benefits and costs of those options, as well as their usefulness for enforcement and research on paid preparer behavior.
Closed - Implemented
Because of the important role of paid preparers in administering the U.S. tax system, better information about preparer behavior and their contribution to taxpayer compliance could ultimately help reduce the large tax gap. As a result of IRS's Return Preparer Strategy, IRS began requiring all paid preparers to have a Preparer Tax Identification Number (PTIN) beginning January 1, 2011 and to renew their PTIN on an annual basis. Having this identification number is an important first step in having better information for improving IRS's ability to identify paid preparers.

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